TOKYO: Tokyo stocks lost 2.18 percent on Monday to end at the lowest point in nearly five months despite a G7 pledge to help stabilise markets in the wake of the first-ever cut in the US credit rating.
The benchmark Nikkei-225 index of the Tokyo Stock Exchange fell 202.32 points to 9,097.56, the lowest finish since March 17, when Japan had just been hit by its huge quake, tsunami and nuclear disasters.
The Topix index of all first-section issues sank 2.26 percent or 18.10 points to 782.86.
The Nikkei opened down 1.40 percent after the G7 economic powers -- Britain, Canada, France, Germany, Japan, Italy and the United States -- said in a joint statement that they would "take all necessary measures to promote stability".
The G7 move followed the first ever downgrading of the US credit rating by a major agency, which spawned fears of more market turmoil.
Losses in Tokyo stocks widened in the afternoon, dragged down by heavy selloffs in other Asian bourses such as in China and South Korea.
Still, "Japan stocks are outperforming" other Asian markets, said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
The market was propped up by the Bank of Japan buying funds linked to stock indexes under its asset purchase programme to help ensure recovery from the March disaster, Fujito told Dow Jones Newswires.
The buying "likely came first thing in the morning as a preemptive measure to stem what otherwise would have been a dramatic market response to the S&P downgrade," he said.
Fujito also noted that the government's willingness to intervene in the currency exchange market if and when needed, following its yen-selling last week, was also supporting the floor for the Nikkei.
But he said the index may fall further this week, especially if US stocks sustain heavy losses later in the day.
It is too soon to brush off the potentially enormous impact of the downgrade but it was unlikely that the Nikkei would fall below the low after the March disaster, said Yumi Nishimura, senior market analyst at Daiwa Securities.
"Even in the worst-case scenario, it's hard to imagine that the Nikkei will dip below its post-quake low (of 8,227.63)" hit on March 15, she said.
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